BUREAU OF ORDNANCE

COMDR. H. J. HARTMAN, CEC, USN, HEAD, EXPLOSIVES PRODUCTION, STORAGE AND OUTLOADING FACILITIES SECTION, FACILITIES AND EQUIPMENT BRANCH, NAVAL ORDNANCE ESTABLISHMENT DIVISION

J. E. TERRY, TECHNICAL ASSISTANT FOR FACILITIES TO THE SYSTEMS DIRECTOR, BUDGET FACILITIES AND WORKLOAD, RESEARCH AND DEVELOPMENT DIVISION

BUREAU OF MEDICINE AND SURGERY

COMDR. W. G. LAWSON, MC, USN, HEAD, DESIGN AND CONSTRUCTION BRANCH, PLANNING DIVISION, BUREAU OF MEDICINE AND SURGERY

NAVAL OBSERVATORY

CAPT. FREDERIC A. GRAF, USN, SUPERINTENDENT, NAVAL OB

SERVATORY

NAVAL COMMUNICATIONS

CAPT. J. V. BEWICK, USN, PROGRAM CONTROLLER, OFFICE OF DIRECTOR

OFFICE OF COMPTROLLER

COMDR. JOHN D. BURKY, CEC, USN, OFFICE OF THE COMPTROLLER, DEPARTMENT OF THE NAVY

REVIEW OF 1954 CONSTRUCTION PROGRAM

(See also p. 562)

Mr. DAVIS. We will be glad to hear your statement, Admiral Baker. We will proceed from there on with such other people as you may have with you to present the Navy story.

GENERAL STATEMENT OF ADMIRAL BAKER

Admiral BAKER. Thank you, sir. Mr. Chairman and gentlemen, I am here, as Assistant Chief of Naval Operations, to respectfully ask your committee to approve our request to obligate existing funds for construction of Navy public-works projects as required by section 805, Public Law 207, of the 83d Congress, which provides:

That no funds shall be obligated under the authority contained in this section on any project authorized in the 1st session of the 83d Congress until the Department of Defense has come into agreement with the Committees on Appropriations of the House of Representatives and the Senate.

In Public Law 209 of the 83d Congress the Navy was authorized to establish or develop 43 activities at a total cost of $85,357,130.

In Public Law 207 of the 83d Congress the Navy was authorized to establish or develop 2 additional facilities at 2 of the previously included activities at a total cost of $4 million.

In the closing meeting of your committee, during the 1st session of the 83d Congress, you approved the following 8 facilities, totaling $13,821,000, 7 of which were authorized under Public Law 209, 83d Congress, and 1 was authorized under Public Law 534, 82d Congress.

1. 36-inch water tunnel, Carderock, Md.

2. Wind-tunnel completion, Carderock, Md.

3. Boiler and turbine laboratory, Philadelphia, Pa---

4. Atomic power laboratory, Schenectady, N. Y..

5. Marine Corps supply depot, Albany, Ga....

6. Marine Corps schools, Quantico, Va-

7. Replacement housing, overseas.

8. Classified project---

Total

$800,000 665, 000 1,431, 000 968,000 5, 000, 000 163,000 4,000,000 794,000

13, 821, 000

In addition, $3 million were approved for architectural and engineering work applicable to the overall program.

The Navy has the approval of the Department of Defense to present to this committee today a request for clearance to construct with existing funds:

(a) Seventy-three projects totaling $67,892,130 authorized in Public Law 209, 83d Congress.

(b) Two projects totaling $4 million authorized in Public Law 207, 83d Congress.

(c) One project totaling $225,000 authorized in Public Law 564, 81st Congress.

(d) Eight projects totaling $10,270,000 authorized in Public Law 155, 82d Congress.

(e) One project totaling $915 authorized in Public Law 534, 82d Congress.

Summarizing, the Navy presents today 85 projects totaling $83,302,130, less $3 million in A. and E. funds which will be prorated and charged against each project in the fiscal year 1954 program.

There remains in the Navy fiscal year 1954 public-works program, 13 authorized projects totaling $9,170,000 which the Navy and Secretary of Defense have under study to determine actual needs and costs. The Navy respectfully requests permission to present these projects to the committee at a later date provided concurrence is obtained from the Secretary of Defense.

The program is based on the premises that in fiscal year 1954 new facilities are of such urgency that they must be initiated in fiscal year 1954 to support immediate operational requirements and they must be funded from existing funds. Upon completion of this statement Rear Admiral Perry, Chief of the Bureau of Yards and Docks, is prepared to discuss the source of funds to finance projects proposed in our

program.

This program, based on the above premises, is a further increment of the Navy shore station improvement plan. This plan has the following objectives:

1. Provide new facilities where strategic requirements make them

necessary.

2. Modernize present installations to keep abreast of technological advances in material and equipment.

3. Replace facilities that are in a critically unsatisfactory condition. In 1950 the shore-improvement plan for the Navy was revised as a result of the Korean action and the resultant decision to expand the Armed Forces. This plan resulting from guidance furnished at that time by the National Security Council and the Joint Chiefs of Staff required an expenditure of $3 billion for the overall improvement and development of supporting facilities to meet the then planned expansion of the operating forces. The program was to be phased

through fiscal year 1954. In support of the plan, appropriations were made by the 82d Congress as follows: In Public Law 254, fiscal year 1952, $800,000,000; in Public Law 547, fiscal year 1953, $363,284,800; for a total of $1,163,284,800. This sum is substantially less than the $3 billion originally planned.

The shore-station improvement plan is under continuing review within the Navy Department to insure that only those facilities which are essential to support the operating forces are to be provided. Since operating-force levels have not been changed, the basic concept of the shore-station improvement plan remains the same, consequently the program before you is in consonance with current guidance.

Prior to receiving authorization in Public Laws 209, 83d Congress, and 207, 83d Congress, this program was thoroughly reviewed by the Navy Department, the Secretary of Defense, the Bureau of the Budget, and the Armed Services Committees of the House and Senate. During the past month the Assistant Secretary of the Navy reviewed this program. The Assistant Secretary was assisted in his review by four special consultants. These four consultants are men with lifetime experience in the field of finance, production, construction, and engineering. Together they and the Assistant Secretary have concluded that:

(a) Each of the projects contained in the Navy program is fully justified as to need;

(b) Each of these projects should be initiated during fiscal year 1954;

(c) Detailed engineering data are being prepared for each project and no contract for any facility will be awarded until such engineering study for the particular project is complete.

A large portion of the program is for the continuation of fleet support aviation activities, the augmentation of which started under the authorization and appropriation granted by the 81st Congress. Other segments provide for needed facilities to keep pace with new designs and advances in technology in ships, aircraft, and ordnance. There are also included several projects to provide troop housing at existing permanent stations.

With the permission of the committee, I would like to introduce Rear Admiral Perry, recently appointed Chief of the Bureau of Yards and Docks.

Mr. DAVIS. We would be glad to hear you, Admiral Perry, and then we will direct our questions to both or either of you, as you may see fit to divide the answers after you have presented your statement.

GENERAL STATEMENT OF ADMIRAL PERRY

Admiral PERRY. Thank you, sir. Mr. Chairman and gentlemen, utilizing the $3 million released by this committee last August, the Bureau of Yards and Docks has proceeded with the design of final plans and specifications for the authorized fiscal year 1954 construction program. Design contracts have been awarded to private architects and engineers for approximately 80 percent of the 1954 projects. The Bureau will continue its policy of awarding construction contracts as a result of competitive bidding. It is not expected that costplus-a-fixed-fee contracts will be required in the continental United States for work contained in this public works bill. Cost-plus contracts must continue to be utilized in a few foreign or isolated loca

tions where the risks that must be assumed by the contractors under a lump-sum contract would result in excessive and unwarranted costs to the Government.

We are continuing to develop construction standards in keeping with the austere building program directed by the Congress, the Secretary of Defense, and the Secretary of Navy. Nonessentials have been eliminated from our designs. All efforts are being made to produce strictly functional facilities with durability consistent with their mission.

Turning to the financial aspects of the Navy's construction program, Bureau records show that at the end of September 1953 unobligated appropriations for "Public works, Navy" were $415 million. Of this amount, $105 million is not available for obligation because of a lack of base rights or of planning and design criteria. In addition, $108 million is earmarked for financing the 1954 public works program and cannot be obligated until this program has been cleared by the Appropriation Committee and funds apportioned by the Bureau of the Budget.

The $108 million necessary to accomplish the fiscal year 1954 construction program is made up of approximately $51 million of cash savings from prior appropriations; $10 million from Yards and Docks administrative reserves; $21 million from funded projects not now declared essential; and $26 million from projects that can be deferred at this time.

It is estimated that by the end of fiscal year 1954, $282 million will be unobligated. At normal obligational rates this sum will be obligated in its entirety during fiscal year 1955. Projecting into the future and on the assumption that the 1955 program will be made available for obligation shortly after the beginning of the fiscal year, it appears probable that both the carryover of the old program and the proposed 1955 program can be substantially obligated during fiscal year 1955.

From a standpoint of cash expenditures, it is estimated that public works will expend approximately $353 million during fiscal year 1954, which will leave $453 million for expenditures in fiscal year 1955 and subsequent years.

Mr. DAVIS. I think it well that we discuss these general statements before we do have the presentation on the specific 1954 program. Admiral BAKER. Yes, sir.

Mr. DAVIS. I think first of all I should like to ask each of you in turn for the record to give the committee some of the experience you have had prior to your assumption of the positions you now hold; if you will, please.

Admiral BAKER. My personal experience, sir?

Mr. DAVIS. Yes, if you would.

REVIEW OF SHORE ESTABLISHMENT REQUIREMENTS

Admiral BAKER. All right, sir.

I have been the senior member of the Shore Station Development Board in the Navy Department since April of 1952. During that time we have examined the complete program which was proposed for the Navy in 1950 at the beginning of the Korean incident.

As has been pointed out in my statement, at that time the requirements of the Navy to bring its shore establishment up to the level

necessary to support the fleet completely and the operating forces completely totaled about $3.4 billion. We examined every one of those projects which were left unauthorized or unappropriated for, and as it says in the statement here we had received authorizations and appropriations for $1.163 billion, plus $0.4 billion in fiscal year 1951, which left about $1.8 billion really to be reexamined.

My Board examined every project in this $1.8 billion program which we call our requirements program. We determined ourselves that we had a requirements program remaining of about $1.8 billion.

However, there were imposed upon us certain restrictions and certain criteria which caused us to eliminate $500 million worth of projects in this overall program to meet the needs of the Navy.

Those projects were carefully reviewed, and we finally arrived at a program totaling about $1.3 billion, which we substantiated as requirements for necessary facilities for the Navy.

In preparing last year's program we first submitted to the Secretary of Defense about $1.3 billion for authorization, and funding of about $996 million. The $1.3 billion would bring our shore facilities up to the required level for support of the operating forces, but some of these things could be done not in fiscal year 1954 but 2 or 3 or 4 years later.

Having done that, we again examined the program at the direction of the Secretary of Defense and we reduced it to some $300 million at his direction.

In April of last year we were told to examine each project on the basis of its urgency. We examined them. We were told that we should submit a program which must be initiated in fiscal 1954. That totaled about $140 million and that was based on the premise that no new funds would be made available.

We asked for authorizations to the extent that we could finance with existing funds: for example, from savings; by reprograming; and funds from projects which we would like to defer-which may have been desirable, but because events had caught up with us in some cases, we were prepared to use, with your permission, for other, more urgent work.

This was further reviewed, and our program was submitted to the Congress, and the authorization was granted for about $91 million of projects.

Likewise, last year the Director of the Bureau of the Budget told us to reexamine every project which we had which was less than 20 percent complete or for which we were requesting funds but for which no apportionment had been made. In other words, of all the projects previously authorized and appropriated for by the Congress, those that were over 20 percent complete the Director of the Bureau of the Budget considered should go ahead, because no possible savings could accrue if they were that far along. For anything less than 20 percent they should be reexamined for essentiality.

We went over every one of those projects and they were substantiated as to their essentiality, except that we did defer approximately $22,127,000 worth of projects.

I feel, Mr. Chairman, that the Navy Department has examined each of these projects for this particular program thoroughly and completely. We have examined each of the projects which has been previously authorized completely and thoroughly, and we have referred